Under Armour Ups Guidance on Solid Q2 Results…

Under Armour, Inc. saw second quarter revenues outpace growth of recent quarters, thanks in large part to the company’s entry into the athletic footwear market and more robust gains in its loose fitting product. The period has traditionally been the weakest for the brand, but the management team has apparently been pushing all the right buttons to fill in the valleys in its business.

Revenues excluding the new cleated footwear and slides business, which totaled $15.6 million for the period versus zero revenues in Q2 last year, were still up a healthy 31.4% compared to the year-ago quarter. The move into football cleated footwear did more than add volume. Company founder and CEO Kevin Plank said the “door is now open to applying Under Armour technology to other athletic shoe categories.” Footwear represented 19% of sales for the period. Baseball cleats look to be the next category in footwear and is estimated to be 5% to 6% of revenues in the fourth quarter.

Plank said that the golf market is a natural extension for the brand as a majority of their key accounts expand UA golf product to all doors.

Key accounts became even more important to the brand in Q2, representing 62% of revenues for Q2 compared to 50% in Q2 last year.

Training product accounted for nearly half the growth in the men’s business for the period, while golf contributed a third of the men’s gain. Sales of loose-fitting HeatGear product grew to equal the compression business in the first half, a solid trend from the 35/65 ratio in H1 last year. Still, Plank sees little cannibalizing of the compression business, particularly in women’s, pointing to 30% growth in HeatGear T’s and compression shorts versus Q2 last year.

Plank said the women’s business would have shown even stronger growth than the reported increase, because closeouts made up a higher percentage of sales in the women’s business in Q2 last year. Excluding the impact of the closeout business for both quarters, sales in the women’s business would have been up 65% for the period.

The company is focused on growing the business outside the U.S. as well. Plank said they began the year selling into about 100 doors in Europe, but sees that number growing to 400 or 500 doors by year-end. He pointed to a successful test in 20 JJB Sports doors this past spring that will prompt that retailer to roll product to 150 doors this fall.

The company has inked a number of distribution and master agent deals to bolster their international efforts. While the U.K. will continue to be serviced by direct company personnel, UARM has signed deals with Equation Performance in France, Main Sport in Germany and Austria, Sportbax SRL in Italy, SGA Vanneste in the BeNeLux region, and MnO International for Iceland and the Nordic and Baltic states. They also added Fiddes Enterprises for Australia and the Pacific Islands.

UARM now expects net income to increase 72% to 78% for the year to a range of $34 million to $35 million on sales in the range of $400 million to $410 million, or a 42% to 46% increase over 2005 results. The company increased the net income forecast by $3 million and the sales estimate by $20 million from initial estimates at the end of Q1.

>>> Rumor has it that running and golf are both in the footwear pipeline, but SEW can’t help but think that these guys could be the needed catalyst to kick start the cross training business again…